STOCK-BASED COMPENSATION:

CONSOL Energy adopted the CONSOL Energy Inc. Equity Incentive Plan (the Equity Incentive Plan) on April 7, 1999. The Equity Incentive Plan provides for grants of stock-based awards to key employees and to non-employee directors. Amendments to the Equity Incentive Plan have been adopted and approved by the Board of Directors and the Company's Shareholders since the commencement of the plan. Most recently, in May 2016, the Board of Directors and the Company's Shareholders adopted and approved a 10,550,000 increase to the total number of shares available for issuance, which brought the total number of shares of common stock that can be covered by grants to 42,350,000. At December 31, 2016, 8,733,169 shares of common stock remain available for all awards. The Equity Incentive Plan provides that the aggregate number of shares available for issuance will be reduced by one share for each share issued in settlement of stock options and by 1.62 for each share issued in settlement of Performance Share Units (PSUs) or Restricted Stock Units (RSUs). No award of stock options may be exercised under the Equity Incentive Plan after the tenth anniversary of the effective date of the award.

For only those shares expected to vest, CONSOL Energy recognizes stock-based compensation costs on a straight-line basis over the requisite service period of the award, which is generally the vesting term. Awards granted in 2014 vest immediately if granted to retiree-eligible employees who are aged 62 and older. Awards granted in 2014 vest at the end of one year when granted to employees aged 55 to 62 and who have also completed ten years of service. Awards granted in 2014 vest over a three-year term at 33% per year for all other employees. Awards granted in 2015 vest over a three-year term at 33% per year. Options and RSUs granted in 2016 vest over a three-year term at 33% per year. Performance share units granted in 2016 vest over a five-year term at 20% per year subject to performance conditions. If an employee leaves the Company, all unvested shares are forfeited. The vesting of all awards will accelerate in the event of death and disability and may accelerate upon a change in control of CONSOL Energy. See each specific award section for special vesting terms related to non-employee directors and other specific awards. The total stock-based compensation expense recognized during the years ended December 31, 2016, 2015 and 2014 was $31,483, $24,513 and $41,877, respectively. The related deferred tax benefit totaled $11,255, $9,229 and $15,243, for the years ended December 31, 2016, 2015 and 2014, respectively.

As of December 31, 2016, CONSOL Energy has $40,234 of unrecognized compensation cost related to all nonvested stock-based compensation awards, which is expected to be recognized over a weighted-average period of 2.73 years. When stock options are exercised and restricted and performance stock unit awards become vested, the issuances are made from CONSOL Energy's common stock shares.

Stock Options:

CONSOL Energy examined its historical pattern of option exercises in an effort to determine if there were any discernable activity patterns based on certain employee populations. From this analysis, CONSOL Energy identified two distinct employee populations and used the Black-Scholes option pricing model to value the options for each of the employee populations. The expected term computation presented in the table below is based upon a weighted average of the historical exercise patterns and post-vesting termination behavior of the two populations. The risk-free interest rate was determined for each vesting tranche of an award based upon the calculated yield on U.S. Treasury obligations for the expected term of the award. The expected forfeiture rate is based upon historical forfeiture activity. A combination of historical and implied volatility is used to determine expected volatility and future stock price trends. The total fair value of options granted during the year ended December 31, 2016 was $19,305, based on the following assumptions and weighted average fair values:



	December 31,
	2016
Weighted average fair value of grants	$	5.73
Risk-free interest rate	1.13		%
Expected dividend yield	0.27		%
Expected forfeiture rate	2.00		%
Expected volatility	61.09		%
Expected term in years	4.90

CONSOL Energy did not grant stock option awards during the years ended December 31, 2015 or 2014.

A summary of the status of stock options granted is presented below:



				Weighted
				Average
			Weighted	Remaining	Aggregate
			Average	Contractual	Intrinsic
			Exercise	Term (in	Value (in
	Shares		Price	years)	thousands)
Balance at December 31, 2015	3,621,002		$43.15
Granted	3,369,197		$4.22
Exercised	—		—
Forfeited	(781,386	)	$36.32
Balance at December 31, 2016	6,208,813		$22.88	6.02	$	—
Vested	2,990,263		$43.12	2.57	$	—
Exercisable at December 31, 2016	2,990,263		$43.12	2.57	$	—

At December 31, 2016, there are 5,888,075 employee stock options outstanding under the Equity Incentive Plan. Non-employee director stock options vest one year after the grant date. There are 320,738 fully vested stock options outstanding under these grants.

The aggregate intrinsic value in the table above represents the total pretax intrinsic value (the difference between CONSOL Energy's closing stock price on the last trading day of the year ended December 31, 2016 and the option's exercise price, multiplied by the number of in-the-money options) that would have been received by the option holders had all option holders exercised their options on December 31, 2016. This amount varies based on the fair market value of CONSOL Energy's stock. No options were exercised during the year ended December 31, 2016. The total intrinsic value of options exercised for the years ended December 31, 2015 and 2014 was $2,744 and $14,545, respectively.

Cash received from option exercises for the years ended December 31, 2015 and 2014 was $8,281 and $15,011, respectively. The tax impact from option exercises totaled $208 and $2,629 for the years ended December 31, 2015 and 2014, respectively. This excess tax benefit is included in cash flows from financing activities in the Consolidated Statements of Cash Flows.

Restricted Stock Units:

Under the Equity Incentive Plan, CONSOL Energy grants certain employees and non-employee directors restricted stock unit awards, which entitle the holder to shares of common stock as the award vests. Non-employee director restricted stock units vest at the end of one year. In 2014, restricted stock units were granted that will vest over a five year period unless certain market conditions are met, in which the award will accelerate. Compensation expense is recognized over the vesting period of the units, described above. The total fair value of restricted stock units granted during the years ended December 31, 2016, 2015 and 2014 was $493, $26,550 and $31,360, respectively. The total fair value of restricted stock units vested during the years ended December 31, 2016, 2015 and 2014 was $19,095, $20,793 and $15,686, respectively. The following table represents the nonvested restricted stock units and their corresponding fair value (based upon the closing share price) at the date of grant:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2015	1,303,573		$32.60
Granted	27,379		$17.99
Vested	(579,246	)	$32.97
Forfeited	(88,703	)	$30.42
Nonvested at December 31, 2016	663,003		$31.97

Performance Share Units:

Under the Equity Incentive Plan, CONSOL Energy grants certain employees performance share unit awards, which entitle the holder to shares of common stock subject to the achievement of certain market and performance goals. Compensation expense is recognized over the performance measurement period of the units in accordance with the provisions of the Stock Compensation Topic of the FASB Accounting Standards Codification for awards with market and performance vesting conditions. For the PSUs issued in 2014 and 2015, achievement of the market goals is not probable, but achievement of the performance goals is probable. Achievement of the market goals is probable for the first tranche of the PSUs issued in 2016. The total fair value of performance share units granted during the years ended December 31, 2016, 2015 and 2014 was $24,283, $18,771 and $11,853, respectively. No performance share units vested during the year ended December 31, 2016. The total fair value of performance share units vested during the years ended December 31, 2015 and 2014 was $20,083 and $18,759, respectively. The following table represents the nonvested performance share units and their corresponding fair value (based upon the closing share price) on the date of grant:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2015	491,493		$27.83
Granted	950,404		$25.55
Vested	—		—
Forfeited	(17,346	)	$19.62
Nonvested at December 31, 2016	1,424,551		$26.41

Performance Options:

Under the Equity Incentive Plan in 2010, CONSOL Energy granted certain employees performance options, which entitled the holder to shares of common stock subject to the achievement of certain performance goals. Compensation expense was recognized over the vesting period of the options, described above. The Black-Scholes option valuation model was used to value each tranche separately. No performance options were granted in 2016, 2015, or 2014. No performance options vested in 2016 or 2015. The total fair value of performance options vested during the year ended December 31, 2014 was $4,949. A summary of the status of performance options granted is presented below:



			Weighted
			Average
		Weighted	Remaining	Aggregate
		Average	Contractual	Intrinsic
		Exercise	Term (in	Value (in
	Shares	Price	years)	thousands)
Balance at December 31, 2015	802,804	$45.05
Granted	—	—
Exercised	—	—
Forfeited	—	—
Balance at December 31, 2016	802,804	$45.05	3.42	$	—
Vested	802,804	$45.05	3.42	$	—
Exercisable at December 31, 2016	802,804	$45.05	3.42	$	—

CONSOL Stock Units:

Under the Equity Incentive Plan in 2013, CONSOL Energy granted certain employees CONSOL Stock Unit Awards, which entitled the holder to shares of common stock subject to the achievement of certain market and performance goals. Compensation expense was recognized over the performance measurement period of the units in accordance with the provisions of the Stock Compensation Topic of the FASB Accounting Standards Codification for awards with market and performance vesting conditions. CONSOL Energy used the Monte Carlo methodology to estimate the fair value of the CONSOL Stock Units. The achievement of the market and performance goals was not attained and therefore, all shares were forfeited in 2016. No CONSOL Stock Units were granted in 2016. The total fair value of CONSOL Stock Units granted during the years ended December 31, 2015 and 2014 was $110 and $189 respectively. The following table represents the nonvested CONSOL Stock Unit awards and their corresponding fair value at the grant date:



	Number of		Weighted Average
	Shares		Grant Date Fair Value
Nonvested at December 31, 2015	803,998		$33.68
Granted	—		—
Forfeited	(803,998	)	$33.68
Nonvested at December 31, 2016	—		—